How To Become an Insurance Broker in 6 Steps: A Guide

Insurance brokers have rewarding careers where they assist clients with selecting insurance coverage. It's possible to work as an insurance broker out of an office or remotely. To become an insurance broker, you follow a set of educational and licensure requirements that allow you to practice. 

In this article, we discuss the role of an insurance broker, describe the educational and licensure requirements for this profession and explain how the path to becoming one.

What is an insurance broker?

An insurance broker is someone who helps their clients to purchase insurance policies. They can work either independently or through an organization to find the best options for their clients. Insurance brokers don't work for insurance companies but do communicate with them.

It's common for insurance brokers to specialize in one area of insurance, such as auto insurance or health insurance, or to specialize in one type of client, such as medicine or start-ups. Because insurance brokers can offer their clients options from multiple insurance companies, they provide a wider range of prices and services.

Related: Agents vs. Brokers: A Guide To What They Are and How They Differ

What does an insurance broker do?

An insurance broker analyzes their client's needs, presents different insurance options and guide their clients in purchasing insurance policies. Insurance brokers earn a commission on each policy they sell. When an insurance broker gets a new client, they analyze the new client's risk portfolio, price the different insurance options and get the policies approved through underwriting. After the insurance broker has an established client, they continue to perform regular service work, such as updating existing insurance policies, writing reports and providing advice.

Related: Insurance Broker vs. Insurance Agent: What's the Difference?

How to become an insurance broker

Although the steps for becoming an insurance broker depend on your specific situation and the requirements of the state you live in, the following is a general guide on how to become an insurance broker:

1. Decide on education

There's little formal education required to be an insurance broker. Most states only require a high school diploma or minimal postsecondary coursework. Although becoming an insurance broker doesn't require a college degree, you may want to consider the benefits of earning one.

A postsecondary education, whether an associate degree, bachelor's degree or another training program, gives you a solid background of knowledge, gives you information for your resume and may increase your employment opportunities. Common degree programs for insurance brokers include:

• Economics

• Business administration

• Finance

• Accounting

• Marketing

• Psychology

• Sociology

• Communications

Some educational institutions offer a degree specifically in insurance and risk management, but this degree isn't as common as the disciplines listed above. If you have the opportunity, an internship with an insurance firm is a great opportunity to learn and apply your knowledge in a professional environment.

If your education program doesn't offer an internship opportunity, you can try to arrange one yourself. Many of the courses you can take occur both online or in-person, giving you the flexibility to choose a schedule that fits your needs.

Related: Is Insurance Sales a Good Career? (With Pros, Cons and Tips)

2. Choose a specialty

There are many different kinds of insurance, also called "lines of authority," in the insurance industry. Insurance brokers can sell any type of insurance, such as:

• Casualty: This type of insurance primarily covers areas not covered by life, health or property insurance. The most common example of this insurance is workers' compensation.

• Property: This type of insurance provides coverage for people who own or rent a building. It covers areas such as damage and theft related to the property.

• Liability: This type of insurance protects you if you're responsible for someone else's injuries or property damage.

• Accident: Accident insurance covers injuries that occur because of an accident. It often specifies the types of accidents it covers in the policy you choose.

• Health: Health insurance ensures you can visit a medical facility and receive the care you need by covering the costs of your medical needs. Like accident insurance, different policies specify the coverage they provide.

• Life: In this type of insurance, a company agrees to pay a set sum of money to a beneficiary when the owner of the policy passes away.

• Disability: Disability insurance provides a set amount of income when a person's disability prevents them from accomplishing the core functions of their regular work.

• Commercial: This type of insurance allows business owners to protect the assets of their businesses. For example, it provides coverage if a building is damaged or for loss of products because of transportation accidents.

• Automotive: Automotive insurance protects you from damages to your vehicle, passengers within your vehicle and expenses for the passengers and damage to other vehicles if you're at fault for an accident.

• Home: This type of insurance protects homeowners, their properties and their families in the event of damage, theft or other events inside the home.

• Pet: This type of insurance functions similarly to health insurance, except it covers animals instead of people.

Choosing a specialty that interests you helps guide you when making decisions about education, internships, professional development and licensure. Most states require different licenses for selling different types of insurance, so knowing the line of authority you want to pursue is an important part of the licensing process.

Related: 9 Types of Insurance Jobs (With Duties and Salaries)

3. Meet pre-licensure requirements

Once you've chosen a line of authority, research the pre-licensure requirements for your state. All states require insurance brokers to have a license, although the specifications vary from state to state.

The standard pre-licensure requirements are minimum hours of coursework in specific insurance fields, yet some states exempt prospective licensees from such requirements if they're able to submit evidence of relevant work experience.

If an insurance broker is working with multiple types of insurance, most states require them to hold multiple licenses for each type of insurance. If you plan to sell insurance in multiple states, then you need a license for each state.

For example, California requires fingerprints, a background check, a varying number of hours of pre-licensure classwork based on specialization, 12 classroom hours of Ethics and Insurance Code and a qualifying exam for a license. Florida requires fingerprints, a varying number of hours based on insurance discipline and licensing exam, and each course and exam is different based on the type of insurance you want to sell.

Related: How To Become an Insurance Broker in New York State

4. Pass the licensing exam

When you've met all the pre-licensure requirements, it's time to schedule your licensing exam and pay the exam fee, which you can usually do online. Most states offer short-term courses you can take to prepare you for the insurance broker exam. Typically, you go to a testing site, where an outside company proctors the exam. You may need proof that you have met all the pre-licensure requirements before taking the exam.

In most states, you take the test on a computer and the questions are in multiple-choice format. Since it's a digital test, you typically find out whether you passed immediately after finishing it. If you don't pass the test on the first attempt, you can reschedule to take the test again.

Related: How To Become an Insurance Broker in Texas in 6 Steps

5. Apply for a license

After you've passed the licensing exam, you can apply for the qualifying license. This typically entails filling out an application, providing proof of meeting all the pre-licensing requirements, providing proof of passing the licensing exam and an application or processing fee.

Once you receive your official license, you discuss, solicit, negotiate and transact insurance sales. You can also start to build your own clientele base or apply for jobs with insurance agencies or brokerages. Most states also require the completion of continuing education courses to renew licenses.

Related: How To Become an Insurance Broker in Florida in 7 Steps

6. Pursue optional certifications

Some insurance brokers choose to advance their careers and professional development by earning certifications. There are many voluntary certifications available through the National Alliance for Insurance Education and Research. Some certifications include counseling, service representative, risk manager and financial planner. These optional certifications require experience, coursework and exams.